* WTO "condemns much US aid for Boeing challenged by EU"
* Confidential ruling may not be published until mid-2011
* Findings to determine US-EU aircraft row (recasts with European source, US, EU comments)
By Jonathan Lynn and Tim Hepher
GENEVA/PARIS, Sept 15 (Reuters) - World Trade Organization judges have found aircraft maker Boeing received more than $20 billion in U.S. government subsidies challenged by the European Union and called for them to be withdrawn, a European source said on Wednesday.
The confidential ruling, if confirmed, would add weight to European calls for a negotiated settlement to the trans-Atlantic row over the aerospace industry -- the biggest bilateral trade dispute -- following WTO condemnation in June of illegal European subsidies for Boeing rival Airbus.
But in the past both sides have accused the other of putting out misinformation so early leaks must be treated with caution.
The confidential report, issued only to EU and U.S. officials, will not be made public until possibly mid-2011.
Boeing argues that any aid for which Washington is faulted pales in comparison with subsidies for Airbus that were resoundingly denounced by the WTO in a ruling in a parallel case.
Both sides have appealed various findings in that case.
TRADE RULES BROKEN
The European source said the WTO judges had backed EU complaints over some $17 billion in research contracts from the U.S. aerospace agency NASA and the Pentagon, and $4 billion in tax breaks from Washington state.
The WTO judges found these payments broke WTO rules and should be withdrawn, the source said. The figures were not cited in the report but were derived from adding the respective claims.
But the WTO dispute panel did not find that aid challenged by the EU was prohibited -- as it did in a ruling in the parallel case against Airbus subsidies brought by the United States -- which would have required faster remedies, the source said.
It also dismissed EU complaints over property tax and other measures in Kansas.
There was no immediate confirmation of the findings in the United States.
The U.S. Trade Representative's office confirmed it had received the report into what it called one of the most complex and lengthy disputes to come before the WTO, but said it could not comment as the interim report remains confidential.
European officials hope that will encourage the United States to negotiate a settlement to the quarrel over subsidies for aircraft, the world's biggest trade dispute.
The EU repeated that call on Wednesday saying the challenge was for Brussels and Washington to find a mutually acceptable approach to running the aircraft industry, and suggesting that President Barack Obama should get involved in the case.
"The EU has said all along that only negotiations at the highest political level can lead to a real solution and we hope that today's report provides momentum in that direction," EU trade spokesman John Clancy said in a statement.
Obama will attend the EU-US summit in Lisbon on Nov. 20, providing an opportunity to discuss the dispute.
The United States opposes talks until the EU drops aid for Airbus's new A350 airliner which it says is similar to the other Airbus support already condemned by the WTO.
In a statement released earlier on Wednesday, Boeing said the June WTO ruling against the European Union had found that some of the "launch aid" Airbus received from the EU and member states had violated global trade rules.
"We look forward to hearing how the WTO ruled in today's preliminary decision on U.S. practices, none of which have the market-distorting impact of launch aid nor even approach the sheer scale of European subsidy practices," Boeing said. (Additional reporting by Laura MacInnis in Geneva, Doug Palmer in Washington and Juliane von Reppert-Bismarck in Brussels; Editing by Matthew Jones)